Thursday, May 24, 2012

Christine Lagarde:This “special moment” has now come to full maturity

By Christine Lagarde
Managing Director, International Monetary Fund
Cambridge, May 23, 2012

As prepared for delivery
Good afternoon. It is a great pleasure to join you on this day of celebration, and I would like to thank Dean Ellwood for his kind invitation.
This is a day of hope—after achieving success in one of the world’s most prestigious universities, you are now ready to bring your incredible talents and enthusiasm to bear on the world’s most pressing problems and exciting challenges, making it better.

This is also a day of joy—after a long and arduous climb, you have reached the top of a mountain and can now bask in the glorious view.
But rest assured, there will be more mountains ahead. It was Nelson Mandela who said that “after climbing a great hill, one only finds that there are many more hills to climb”.
Remember, the future is yours to shape and mould into whatever image you choose. But although you will soon set off down many different paths, I believe all these paths have something important in common. You will all, in your own way, be advancing the public interest. You will have different destinations, but the same overarching goal: making it better.
This is why you came to the Kennedy School in the first place. Dean Ellwood puts it beautifully when he says that everybody at the Kennedy School is united by a common desire to make the world a better place. There is no nobler goal than this. And in today’s interconnected world, these ideals are more important than ever.
So the question I ask you is this—do you have the courage to desire, even demand, a better world to leave to your children?
With this in mind, let me talk about three things today.
  • First, the kind of new world that awaits you.
  • Second, the overwhelming importance of being good global citizens in this world.
  • Third, if you will indulge me, I would like to share a little of my personal story.
The “new” world of interconnections: a world in progress
Across the long tide of human civilization, there have been many ebbs and flows, many advances and retreats, many great strides forward and many shattered opportunities. But there has never been a time quite like the present, because history does not repeat itself, and because we produce progress.
We stand at the entrance of a new world, a whole new way of living, of communicating, of crossing borders. It is the great paradox of our age: the world gets bigger, with so many more people and places sharing the fruits of knowledge and prosperity; and the world gets smaller, with so many more people and places crossing paths and sharing destinies.
For today, the world is more closely-knit than ever before. An infinity of little interconnections dances across the fabric of global society, transforming millions of fragmented images into one dazzling mosaic.
As George Bernard Shaw put it, “We are all dependent on one another, every soul of us on earth”.
People are meeting each other in the global marketplace of goods and ideas more than at any point in history.
Since 1980, the volume of world trade has quintupled. People are flowing more freely across borders. About 900 million tourists traveled between countries in 2010, up from a mere 25 million in 1950. The world has over 200 million migrant workers, up from 78 million in 1965.
Highly-skilled professionals—like yourselves—are even more mobile. Foreigners make up between a fifth and a quarter of the professional workforce in countries like Australia, Canada, and Switzerland.
Look at modern business. There is no greater symbol of American industrial pride than the roaring automobile industry in Detroit. And in 2010, for the first time in its history, General Motors sold more cars in China than at home.
Global companies like Nokia, Nestle and Philips earn only 1-2 percent of total sales from their home countries. Indian information technology companies regularly generate up to 95 percent of their sales in Europe and the United States. One world, open for business.
Nothing embodies our interconnected world more than the reach and fluidity of global communications. The communications revolution is opening a gateway to freedom, a passage to knowledge, an avenue to understanding.
When the first transatlantic cable was laid in 1858, it took more than two minutes to transmit a single character. As recently as twenty years ago, the long-distance phone call was still prohibitively expensive.
Today, communication is cheap, instantaneous, multifaceted, and global.
You are the generation that is constantly “plugged in”—to your family, your friends, your colleagues, and indeed to the issues of the day and the concerns of the world.
You are the internet generation. The internet brings the global family to the kitchen table. It is truly the screen of a billion dreams, the portal of a billion possibilities.
You are the generation of social media, which turns a simple two-way conversation into a multi-layered and textured process of mutual interaction.
Change is coming with great speed. Last year, the world clocked up 438 billion minutes of international long-distance telephone calls. That is a large number, but a newcomer called Skype clocked up 145 billion minutes.
And since I am in Harvard, I cannot fail to mention Facebook—a global phenomenon connecting 845 million people across the world, sharing their lives and their loves on a single global platform. By the way, I am on Facebook, and Twitter too!
Borders, barriers, walls have come down to allow this degree of interconnection. Yet, more walls are being erected around the globe—physical walls, political walls, mental walls. There is a serious disconnect between the interconnections and the severe fragmentation of global governance. It only takes a couple of comparisons: the original membership of the United Nations in 1945 was 50 member states. Today there are 193 member states. Similarly, the membership of the IMF, originally 40, has increased to 188. There is hardly any space left to hang the many flags of all members on the IMF wall!
Bringing people together around the internet is significantly easier than doing so in the board room or plenary session of any international institution.
Reconciling interconnections and governance with a view to “making it better” will be a real challenge in the coming years. It will be your challenge.
The importance of being good global citizens
This new world of opportunities is also a world of grave challenges and uncertainties. Your generation is facing the worst economic insecurity in decades, possibly ever since the Great Depression.
Just look at some of the signs. The inability of 75 million young people across the globe to find meaningful work. Rising inequality that strains the compact holding our society together. A fear that the global economic engine will no longer deliver as it has in the past.
I really wish our generation could forge instantly a better legacy for you. But now it will be your turn to apply your talent, your determination, and your idealism to help overcome these challenges and seize the opportunities created by this new world. You will need to connect the dots, to reconcile the high-intensity connections with a more cooperative governance.
This requires new ways of thinking, new ways of behaving. To quote John F. Kennedy, it requires “profiles in courage”. Your generation must become another “greatest generation”.
What do I mean by this? With the world becoming a single village, a global family, we now have a core responsibility to be good global citizens, to watch out for each other, to be sensitive to how our actions affect one another—no matter where we live. We need to shed the habits of the past that trapped us in our own mental backyard, or shackled us to the posts of provincialism.
In practice, this means many different things.
It means seeking better living standards for all, and an economic system where the fruits of growth are shared fairly amongst peoples and countries.
It means working to put extreme poverty behind us, so that our fellow global citizens in the world’s poorest countries can take their rightful seat at the table of prosperity.
It means urgent action to preserve the planet from self-induced destruction, before the stark realities of a rapidly warming climate condemn future generations—especially in poorer countries—to a life of hardship and desperation.
It means striving for greater equity, and greater equality of opportunity, between men and women, rich and poor, young and old.
Ultimately, it means working for peace—in our world, in our countries, in our lives.
None of this will be easy. But it will be impossible unless we all stand together, thinking and acting like true global citizens.
And here, I believe education is the first stepping stone to a better world. Through education, we pass on knowledge, learn from each other, better understand each other. It is a bridge between peoples and generations. It is the best investment in our children, no matter where we live, as it provides them with a passport to this new world.
Drew Faust, the president of Harvard, put this really well when she said that “universities nurture the hopes of the world: in solving challenges that cross borders; in unlocking and harnessing new knowledge; in building cultural and political understanding; and in modeling environments that promote dialogue and debate.”
The Kennedy School epitomizes this imperative: forty-three percent of graduates here today are non-U.S. nationals, hailing from 81 countries. You know, more than others, the importance of education in breaking down barriers of suspicion and misunderstanding.
You know the old dictum that the pen is mightier than the sword. I would go further and say the book is mightier than the bomb. You might have heard of the recent “book protest” in Tunisia—a truly remarkable story. A group of citizens occupied a public space, armed only with a book in their hands and an unquenchable fire in their minds. They are an inspiration to us all.
Although you are graduating today, I believe true education is a lifelong endeavor—a life without learning is a life without meaning.
Now you are about to step outside the academy into a world of multiple options. Each of you will be serving the common good of humanity. You will carry the values you learned at this university into the wider world of work.
For those of you entering the public sector, or joining a multinational institution or a non-profit entity, this is clear. You have chosen to serve your fellow human beings. I salute you.
Many of you will also enter the private sector, which is also a noble choice. The business and entrepreneurial sector plays a vital role in forging a better tomorrow for us all. They invest, innovate, create jobs and value.
But private enterprise also needs to be imbued with a keen sense of public duty. The ancients taught that we should strive after virtue in all of life’s arenas. The private sector is one arena.
For sure, the first goal of business is to make profits and reward its shareholders, but it must also be infused by a broader sense of civic duty and heed a broader spectrum of stakeholders—workers, suppliers, customers, the public at large, and the environment.
It is fair to say that some strayed from this path in recent years. I am thinking in particular of the financial sector before the crisis, which pursued its own narrow gain at the cost of the greater good of society. By choosing reckless risk-taking, it sparked the greatest economic collapse since the Great Depression.
There is a basic lesson here—in our interconnected world, a localized bad decision can have globalized catastrophic consequences. Think about Lehman Brothers.
This is why the ancient wisdom of public virtue takes on new meaning today. Our culture needs a greater emphasis on values like consensus-building, social responsibility, and long-term sustainability.
I firmly believe that having more women at the upper echelons of business and finance can go a long way toward changing this culture. Maybe if “Lehman Brothers” had brought more “Lehman Sisters” on board, the outcome would have been different.
My personal story
This is a good place for me to transition to my personal journey. It has been a joyful journey with many twists and turns along the way. I traveled from the private sector to national public service to international public service. From France to the United States to the world.
I feel incredibly privileged. I stand here today on the shoulders of those who came before me, and those who helped and inspired me along the way, small and big people, women and men, family and friends.
The most transformational year of my life was when I was 17 years old. I departed from my cozy world in France and landed into a new life, my American family, and my American school—Holton Arms in suburban Washington. The motto there wasInveniam viam aut faciam (“I shall find a way or make one”). It was a profound cultural shock for me, but it was incredibly exciting. I was exposed to new ideas, a new language, and new ways of thinking.
I came as an American Field Service scholar. This is an organization devoted to the noble pursuits of respect, tolerance, bringing people together in a spirit of mutual understanding. I am who I am today in large part because of those people who welcomed me, who accepted my differences as I accepted theirs. I am forever in their debt.
I found these same values on display when I joined the international law firm of Baker and McKenzie in 1981. I found a dedicated and diverse group of lawyers from all over the world working together toward common goals. I started as a baby lawyer, had my two baby boys along the way, and after years of hard work had the great honor of becoming chairman of the firm in 1999.
And then my life took another unexpected turn. In 2005, I received a call from Paris; the Prime Minister was asking me to join the French government. When you are called to public service, there is really only one answer you can give. So I gave up my cozy chairman’s life in Chicago, packed my bag and flew immediately to Paris. In my haste and excitement, I left my reading glasses behind. So for her first few days of office, the newest French minister tended to squint a lot!
After a couple of years as Minister of Trade and briefly in charge of Agriculture and Fisheries, I had the honor of becoming French Treasury Secretary just a few months before the financial crisis burst, and when France was chairing the European Union under President Sarkozy’s great leadership. I served as Finance Minister a little over four years, and in May last year campaigned to be elected Managing Director of the International Monetary Fund. The first woman, but most assuredly not the last!
Once again, I saw these same values of dedicated internationalism on display at the IMF. The IMF has 188 members and is based on a simple idea—if countries pull together in the common interest and aid each other in times of need, then everyone will prosper together.
When I look back upon my life, I think I have learned two major lessons.
The first lesson: be prepared for change, don’t take anything for granted, be willing to take risks. I urge you to seek your destiny, find your destiny, fulfill your destiny. This has served me well, and I am passing it on to you.
The opportunities available to you in this dazzling new world are far greater than in my day. Take advantage of that. Stride confidently through the open door into the bright future that awaits you. Do not get trapped by the uncertainties of the present moment. Follow the poetry of Bob Dylan: “don’t think twice, it’s alright”!
The second lesson: always stand up for your values, your principles, your ideals. When I first interviewed at a law firm, I was told that I would never make partner. When I asked why, they told me it was because I was a woman. So I thanked them, walked out the door, and never looked back. Tough luck, they did not deserve me!
Whatever you choose to do in life, let it be infused with a spirit of civic virtue. Make sure that your personal destiny overlaps with the common destiny of humanity. Strive for the common good of all.
Let me conclude today by going back to John F. Kennedy. I believe he was ahead of his time.
He was among the first leaders to understand the transformational quality of global citizenship. This is why he created the Peace Corps to serve as ambassadors of understanding. This remains his abiding legacy.
He was the first U.S. president to understand the profound significance of the rising developing countries in the world order—he called it a “special moment” in history.
This “special moment” has now come to full maturity. This generation—your generation—is the first truly global generation. You have a global challenge and a global opportunity to make the world a better place.
And so go forward, embrace the world, change the world. Shape your own future and our common global future. Keep up, and when the world says “give up,” don’t forget that hope whispers: “try one more time….”
I have full confidence in you.

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